The Law on Joint Stock Companies provides that the mandatory management bodies of a company (UAB) are the general meeting of shareholders and the manager. However, an additional body – the board – can be formed. Although a board is not mandatory in a company (UAB), it is possible to form a board both during the establishment and after the establishment of the company (UAB).
Most of the time, in the first years of the company’s (UAB) activity, the board is not formed, but after the expansion of the company’s (UAB) activities, more and more often people think about the formation of the board.
The Articles of the company (UAB) determine the number of board members. According to the Law on Joint Stock Companies of the Republic of Lithuania, there must be at least 3 members (natural persons). The board is elected by the general meeting of shareholders for a period not exceeding 4 years. The chairman of the board is elected from the members of the board. The board makes decisions on the issues most sensitive to the company (UAB), such as: the disposal, investment, transfer, lease, pledge and mortgage of fixed assets of the company (UAB) with a capital value greater than 1/20, as well as the acquisition of assets of such value. The board also appoints and dismisses the head of the company (UAB), makes decisions on the establishment of branches and representative offices and approves their regulations, decides on the participation of the company (UAB) in the establishment of other legal entities and has other functions provided for in the Law on Joint Stock Companies.
If the company (UAB) does not have a board, the competence of the board is attributed to the manager of the company (UAB), in such cases the law provides extremely broad powers for the manager, and if the company (UAB) has a board, it partially takes over some of the manager’s functions and supervises the manager’s activities and control.
Therefore, the board is an extremely attractive company (UAB) management tool, which is especially necessary for larger companies or companies seeking stricter control of the manager’s activity.